Daily Development for Thursday, August 12, 2004
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu

LANDLORD/TENANT; CONSTRUCTION OF LEASE: Ambiguous lease provisions regarding the effect of real estate tax and decreases on rent due will not be construed against the landlord even if the landlord was the initial drafter of the lease.

Citibank v. 666 Fifth Ave. Ltd., 769 N.Y.S.2d 268 (A.D. 1 Dept. 2003).

The question was whether a reduction in the property taxes allocated to tenant could lower the rent below the original fixed rent figure, or whether such reductions would be applied only to prior escalations in the fixed rent. The court concluded that, although the lease was ambiguous, evidence of custom in the industry, post execution conduct of the parties, and testimony of one of the negotiators were sufficient to conclude that the rent could not go below the original fixed rent, despite the effect of property tax reductions.

The tenant argued that the landlord had drafted the lease, and that therefore ambiguities in the lease should be construed against the landlord. The court rejected this premise. It noted that extensive lease negotiations had been conducted by two sophisticated entities as landlord and tenant. The tenant failed to show that it “had no voice in the selection of [the leases’] language”, and therefore, even though the landlord did the initial drafting of the lease, the ambiguous provision could not automatically be construed against the landlord.

Comment: This is apparently not an unprecedented ruling in New York, but the editor notes it because it focuses on a rule that is a favorite whipping boy of the editor. Although, of course, where one party to a transaction insists on a preset form of its drafting, it should be responsible for ambiguities, this presumption of responsibility should go away once it is shown that both parties had an opportunity to bargain concerning the terms of the agreement. The fact that they elected not to discuss a particular paragraph should be an indication that both found it satisfactory, not an indication that one party controlled its terms.

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. The same is true of all commentary provided by contributors to the DIRT list. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a source that is readily accessible by members of the general public, and should take that fact into account in evaluating confidentiality issues.


DIRT is an internet discussion group for serious real estate professionals. Message volume varies, but commonly runs 5 15 messages per work day.

Daily Developments are posted every work day. To subscribe, send the message

subscribe Dirt [your name]



To cancel your subscription, send the message signoff DIRT to the address:


for information on other commands, send the message Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only commercial and general real estate matters but also focuses specifically upon residential real estate matters. Because real estate brokers generally find this service more valuable, it is named “BrokerDIRT.” But residential specialist attorneys, title insurers, lenders and others interested in the residential market will want to subscribe to this alternative list. If you subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as BrokerDIRT carries all DIRT traffic in addition to the residential discussions.

To subscribe to BrokerDIRT, send the message

subscribe BrokerDIRT [your name]



To cancel your subscription to BrokerDIRT, send the message signoff BrokerDIRT to the address:


DIRT is a service of the American Bar Association Section on Real Property, Probate & Trust Law and the University of Missouri, Kansas City, School of Law. Daily Developments are copyrighted by Patrick A. Randolph, Jr., Professor of Law, UMKC School of Law, but Professor Randolph grants permission for copying or distribution of Daily Developments for educational purposes, including professional continuing education, provided that no charge is imposed for such distribution and that appropriate credit is given to Professor Randolph, DIRT, and its sponsors.

DIRT has a WebPage at:


To be removed from this mailing list, send an email message to listserv@listserv.umkc.edu with the text SIGNOFF BROKERDIRT.

Please email manager@listserv.umkc.edu if you run into any problems.
See <http://www.umkc.edu/is/cs/listserv/unsubscribing.htm> for more information.